FORMER technology darling Cupid slumped in value yesterday after unveiling plans to sell its dating websites for £3 million.
The Edinburgh-based owner of the Uniform Dating website said it would become a cash shell following the deal, with a view to investing in other firms or returning capital to investors.
Chairman George Elliott said: “After a number of fundamental changes in the dating market, we instigated a rapid strategic review of the dating business.
“The board believe that today’s announcement represents the solution which protects the best interests of shareholders, by providing much greater certainty over the group’s cash balances and deferred consideration and removing substantially all costs from the group.”
However, shares in the Aim-quoted firm fell heavily after the announcement, ending down 6.5p, or 25.5 per cent, at 19p.
Cupid, co-founded in 2005 as EasyDate by Bill Dobbie and Max Polyakov, has agreed to sell its “traditional” dating operations to three firms – Tradax IP Licensing, registered in the British Virgin Islands (BVI), Malta-incorporated Together Networks Holdings and Together Networks, another BVI business.
Together Networks already operates dating websites including Be Naughty, Cheeky Lovers and Flirt, which were sold last year to Polyakov’s Grendall investment firm in a deal worth £45.1m. However, Cupid said yesterday that a deferred £20m payment from this sale has been reduced to £12.5m. This will be paid by the middle of December next year, rather than November 2016 as originally planned.
Following the latest sale, which is subject to shareholder approval, Cupid said it would have “no material remaining trade” and non-executive directors Ian McCaig and Russell Shaw will resign.
Elliott is set to remain as chairman, while Dobbie – who was succeeded as chief executive by Phil Gripton a year ago – will retain his non-executive position on the board.
Shareholders are due to meet on 23 December to vote on the deal. If approved, Cupid plans to change its name to Castle Street Investments and will be left with about seven UK-based staff following its switch to a cash shell.
The firm said: “It is intended that the board will work to close out all remaining liabilities relating to the dating operations, minimise operating costs and work with the new board to identify potential opportunities in 2015 in line with the investing policy.”
Elliott added: “The company will effectively become a well-capitalised cash shell with approximately £18m that can be utilised for new opportunities in line with our proposed investing policy or returned to shareholders.”
Cupid faced allegations last year that staff had posed as customers in an attempt to encourage customers to buy subscriptions, but an independent review found the claims were “without substance”.
Dobbie last month officially launched his latest venture, a crowdfunding platform called LendingCrowd, that he has set up with Stuart Lunn, a former equities analyst at Cenkos and Collins Stewart.
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